High Court Of Bombay
CIT vs. Parle Biscuits Ltd.
Sections 32AB, 145
R.M. Lodha & J.P. Devadhar, JJ.
IT Appeal No. 215 of 2002
23rd August, 2004
Counsel Appeared
K.R. Chaudhary with Vijay Kantharia i/b H.D. Rathod, for the Appellant : F.B. Andhyarujina with Ms. R.M. Sidhwa, for the Respondent
JUDGMENT
By the court :
Heard.
2. In the appeal two substantial questions of law have been proposed. The said questions read thus : “1. Whether, on the facts and circumstances of the case and in law, the Hon’ble Tribunal was justified in deleting addition of Rs. 2,28,539 made to the closing stock on account of Modvat credit ? Whether, on the facts and circumstances of the case and in law, the Hon’ble Tribunal was justified in holding that income from interest, rent, dividend and profit on sale of toothpaste should be included in the eligible profits for working out deduction allowable under s. 32AB of the IT Act, 1961 ?”
As regards proposed question No. 1, learned counsel for the Revenue fairly conceded that the controversy stands concluded by the judgment of the Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co. Ltd. (2003) 182 CTR (SC) 291 : (2003) 261 ITR 275 (SC).
Insofar as question No. 2 is concerned, we find that the controversy stands concluded by the judgment of the
Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC).
The Supreme Court in the case of Apollo Tyres Ltd. (supra) observed thus : “A perusal of s. 32AB, as it stood at the relevant time, shows that if an assessee has a total income including income chargeable to tax under the head ‘Profits and gains of business or profession’ and if the income from such business is derived from an ‘eligible business’ and if the assessee has out of such income utilised any amount during the previous year for the purchase of new plant or machinery then it is entitled to a set off of a sum equal to 20 per cent of the profit of such eligible business as computed in the accounts of the assessee which account has been audited in accordance with sub-s. (5) of s. 32AB.
The dispute in the present case is in regard to the question whether the assessee’s investment in the UTI is business, and if so, is it a business which qualifies to be an ‘eligible business’ under s. 32AB ?
In regard to the first aspect, we must note that the Tribunal as a question of fact based on material on record has come to the conclusion that the investment in the UTI by the assesseecompany is in the course of its business and its business of manufacture and sale of tyres and sale and purchase of units of the UTI are common in nature and both the businesses are intertwined and interlaced. This finding is accepted by the High Court also. We also find that this business of the assessee-company of buying and selling of units is a business as contemplated under s. 32AB of the Act. The question then is : is it an eligible business under the said section ?
The term ‘eligible business’ is defined under sub-s. (2) of s. 32AB. As per that definition, all business of an assessee-company will be an eligible business unless it falls under the type of business enumerated in sub-cls. (a) and (b) of s. 32AB(2). It is nobody’s case that this business of the assesseecompany is one of those businesses which fall under business enumerated in sub-cls. (a) and (b) of sub-s. (2) of s. 32AB. Therefore, there is no doubt that the business of the assessee-company is an eligible business. The fact that it is shown under a different head of income would not deprive the company of its benefit under s. 32AB so long as it is held that the investment in the units of the UTI by the assessee- company is in the course of its ‘eligible business’. Therefore, in our opinion, the dividend income earned by the assessee-company from its investment in the UTI should be included in computing the profits of eligible business under s. 32AB of the Act.”
Learned counsel for the Revenue did not venture to demonstrate that the business of the assessee falls under the type of business enumerated in sub-cls. (a) and (b) of s. 32AB(2). Accordingly, the Tribunal’s view relating to deduction under s. 32AB with regard to income from interest, rent, dividend and profit on sale of toothpaste that they fall within the meaning of “eligible business” cannot be faulted.
The appeal is, accordingly, dismissed in limine.
[Citation : 282 ITR 547]
